Was The Smart Money Right About New York Times Company (NYT)?

In this article we will take a look at whether hedge funds think The New York Times Company (NYSE:NYT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

The New York Times Company (NYSE:NYT) shareholders have witnessed an increase in support from the world’s most elite money managers lately. The New York Times Company (NYSE:NYT) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistics is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 33 hedge funds in our database with NYT holdings at the end of March. Our calculations also showed that NYT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, We hone in on the aristocrats of this club, approximately 850 funds. It is estimated that this group of investors administer the lion’s share of the smart money’s total asset base, and by tracking their inimitable stock picks, Insider Monkey has formulated a number of investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Gil Simon of SoMa Equity Partners

Gil Simon of SoMa Equity Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 best artificial intelligence stocks to pick the best growth stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s review the new hedge fund action encompassing The New York Times Company (NYSE:NYT).

How are hedge funds trading The New York Times Company (NYSE:NYT)?

At the end of June, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NYT over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is NYT A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Darsana Capital Partners, managed by Anand Desai, holds the most valuable position in The New York Times Company (NYSE:NYT). Darsana Capital Partners has a $378.3 million position in the stock, comprising 22.4% of its 13F portfolio. On Darsana Capital Partners’s heels is Renaissance Technologies, with a $250.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish include Gil Simon’s SoMa Equity Partners, Farallon Capital and David Greenspan’s Slate Path Capital. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to The New York Times Company (NYSE:NYT), around 22.42% of its 13F portfolio. StackLine Partners is also relatively very bullish on the stock, setting aside 10.73 percent of its 13F equity portfolio to NYT.

Now, key money managers have jumped into The New York Times Company (NYSE:NYT) headfirst. Farallon Capital, founded by Thomas Steyer, established the most outsized position in The New York Times Company (NYSE:NYT). Farallon Capital had $173.9 million invested in the company at the end of the quarter. William Duhamel’s Route One Investment Company also made a $78.7 million investment in the stock during the quarter. The following funds were also among the new NYT investors: David S. Winter and David J. Millstone’s 40 North Management, Daniel Sundheim’s D1 Capital Partners, and Thyra Zerhusen’s Fairpointe Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The New York Times Company (NYSE:NYT) but similarly valued. These stocks are Aspen Technology, Inc. (NASDAQ:AZPN), Alleghany Corporation (NYSE:Y), News Corp (NASDAQ:NWSA), Genpact Limited (NYSE:G), Vereit Inc (NYSE:VER), Service Corporation International (NYSE:SCI), and Howmet Aerospace Inc. (NYSE:HWM). This group of stocks’ market caps are closest to NYT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AZPN 28 878045 8
Y 31 270939 6
NWSA 24 342184 -4
G 29 319870 -5
VER 23 491001 5
SCI 27 524384 -3
HWM 30 2360525 5
Average 27.4 740993 1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $741 million. That figure was $1853 million in NYT’s case. Alleghany Corporation (NYSE:Y) is the most popular stock in this table. On the other hand Vereit Inc (NYSE:VER) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks The New York Times Company (NYSE:NYT) is more popular among hedge funds. Our overall hedge fund sentiment score for NYT is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Unfortunately NYT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NYT were disappointed as the stock returned 0.5% since the end of the second quarter (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Follow New York Times Co (NYSE:NYT)

Disclosure: None. This article was originally published at Insider Monkey.